Director liabilities increased
Jan 1, 2010
All Company Directors should be taking a very close look at the new Companies Act 2006. It sets out their responsibilities as Directors and consolidates current legislation and case law. It includes responsibility for risk management and arranging insurance and it is clear that if they fail to properly exercise their duties they could well find themselves at the wrong end of a shareholder action.
Royal Assent was given to The Companies Act 2006 on 8th November 2006. The Act is the longest piece of legislation ever to be put on the statute book in Great Britain and contains hundreds of changes to existing company law – in fact it consists of 760 pages, 47 parts and 1300 sections.
The Act impacts on all private, public and quoted companies. One of the most significant changes will be the right for the shareholders of a company to sue the current, and former, Directors for acts of negligence and breaches of duty via derivative actions. This obviously enhances the need for Directors to ensure that they are properly protecting shareholder’s investments by proactively managing risk and undertaking Business Continuity Management.
One insurer, in conjunction with Wilby Ltd, is currently running a special promotion offering 90 days of free insurance cover. If you would like more information please contact Mark Studholme on 01422 358525, or email: mark.studholme@wilbyltd.co.uk.
To find out more about The Companies Act 2006 visit the DTI website
www.dti.gov.uk/bbf/co-act-2006.
